DEPARTMENT OF LABOR ALIGNS ITSELF WITH ELVENTH CIRCUIT BY ANNOUNCING THE PRIMARY BENEFICIARY TEST AS THE DEFINITIVE TEST FOR ASSESSING WHETHER INTERNS QUALIFY AS EMPLOYEES UNDER THE FEDERAL LABOR STANDARDS ACT

In 2010, under the Obama administration, the DOL issued a
six-factor test for determining whether an intern was an employee for the
purposes of the FLSA in an attempt to crack down on employers designating
individuals as interns to avoid wage and hour laws. However, since that test
was announced, appellate courts across the country have rejected it in favor of
the “primary beneficiary” test. Seee.g., Benjamin, 877 F.3d at 1146 (9th Cir. 2017); Schumann,
803 F.3d at 1211-12 (11th Cir. 2015). As a result, on January 5, 2018, the DOL
announced that “going forward, the [agency] will conform to these appellate
court rulings by using the same ‘primary beneficiary’ test.” The DOL’s
reasoning was based on the flexibility of the primary beneficiary test where
“no single factor is determinative” and which allows for courts to assess the
“unique circumstances of each case.”

The primary beneficiary test is identical to what the
Eleventh Circuit adopted in Schumann. Seeid. It is a
seven-factor test that evaluates the extent to which 1) the intern and employer
understand there is no expectation of compensation; 2) the internship provides
training that would be similar to that which would be given in an educational
environment; 3) the internship is tied to the intern’s formal education
program; 4) the internship accommodates the intern’s academic commitment; 5)
the internship’s duration is limited to the period; 6) the intern’s work
complements, rather than displaces, the work of paid employees while providing
significant educational benefits; and, 7) the intern and the employer
understand that the internship is conducted without entitlement to a paid job
at the conclusion of the internship.

Employers should take heed of these seven factors when
designating any position as an internship.